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ADMINISTAFF REPORTS THIRD QUARTER RESULTS
AND ANNOUNCES NEW HEALTH INSURANCE CARRIER NETWORK
- Gross profit increases 23%
- Operating income increases 26%
- Earnings per share increase 20%
HOUSTON - November 5, 2001 - Administaff,
Inc. (NYSE: ASF), the nation's leading Professional Employer Organization,
today announced results for the third quarter and nine months ended
September 30, 2001. For the third quarter, the company reported
net income and diluted earnings per share of $8.7 million and $0.30,
versus $7.4 million and $0.25 in the 2000 period. "The fundamentals
of our business model continue to produce positive results despite
further softening in the economy," said Paul J. Sarvadi, president
and chief executive officer. "With continued strong demand for our
services, a 45% increase in trained sales consultants and the successful
kickoff of our fall sales campaign, we are confident in our ability
to successfully balance growth and profitability in 2002."
Revenues for the third quarter of 2001 increased
12.9% to $1.1 billion, due to a 7.8% increase in the average number
of worksite employees paid per month, a 4.3% increase in fee payroll
cost per worksite employee per month, and an 8.0% increase in gross
markup per worksite employee per month. Gross profit increased 23.1%
to $49.3 million. The average gross profit per worksite employee
per month increased 14.3% to $232 in the third quarter of 2001,
versus $203 in the 2000 period.
Operating expenses increased 22.2% over the
2000 period to $36.0 million. On a per worksite employee basis,
operating expenses increased 13.3% to $170 per month in the 2001
period from $150 per month in the 2000 period. As a result, operating
income for the third quarter of 2001 increased 25.7% to $13.3 million
from $10.6 million in the 2000 period. "We are particularly pleased
with the operating leverage we experienced this quarter," said Richard
G. Rawson, executive vice president of administration and chief
financial officer. "While sequential unit growth increased 4%, we
experienced a sequential decline in operating expenses of more than
$700,000, or 2%."
For the nine months ended September 30, 2001,
the company reported net income and diluted earnings per share of
$8.1 million and $0.28, versus $7.7 million and $0.27 for the same
period in 2000. Revenues increased 22.9% to $3.2 billion, primarily
due to a 14.2% increase in the average number of worksite employees
paid per month, a 6.8% increase in fee payroll cost per worksite
employee per month and a 9.1% increase in gross markup per worksite
employee per month. Gross profit increased 28.9% to $118.7 million,
with an average monthly gross profit per worksite employee of $192
in the 2001 period compared to $170 in the 2000 period. Operating
expenses increased 31.9% over the 2000 period, and increased to
$176 per worksite employee per month from $153 in the 2000 period.
As a result, operating income for the nine months ended September
30, 2001, increased 2.3% to $9.6 million from $9.4 million in the
2000 period.
Historically, the company's earnings pattern
has included losses in the first quarter, followed by improved profitability
in subsequent quarters throughout the year. This pattern is due
to the effects of employment-related taxes which are based on each
employee's cumulative earnings up to specified wage levels, causing
employment-related taxes to be highest in the first quarter and
then decline over the course of the year.
Administaff also announced today that the company
has taken steps to expand and enhance its healthcare coverage options
for employees beginning January 1, 2002. Administaff will replace
Aetna U.S. Healthcare with a best-of-class network of health insurance
carriers led by UnitedHealthcare and including PacifiCare, Kaiser
Permanente and Blue Cross Blue Shield of Georgia.
UnitedHealthcare will serve as Administaff's
anchor carrier to provide nationwide healthcare coverage. Fortune
magazine has ranked UnitedHealth Group the first or second most
admired healthcare company in America every year since 1995. For
the second consecutive year, CareData, the healthcare division of
J.D. Power and Associates, ranked UnitedHealthcare the Number One
managed care organization in a member satisfaction survey of leading
national health plans.
Other highlights for the third quarter included:
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Employee Service Center. Administaff expanded its eService
platform with the launch of its new Employee Service CenterSM.
This interactive tool allows employees to access benefits information
and personnel forms, view their pay history and other job-specific
information, participate in Web-based training and professional
development, update personal information, and access a wide
range of resources to help integrate their workday with their
personal life. The Employee Service Center combines the functionality
previously available through Administaff Assistant®, bizzportSM
marketplace and eUniversity into a single portal with customization
and personalization features. A co-branding feature enables
client companies to add their company name and logo to the Web
site, thereby underscoring their role as an employer of choice.
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Online Enrollment. With the launch of the Employee Service
Center, Administaff also introduced online enrollment for new
employees at client companies. This new feature is designed
to streamline the process of new employee orientation and benefits
enrollment - making it simpler, faster and more efficient for
employees, clients and Administaff.
-
eUniversity. Administaff expanded its online course offerings
to include eight Microsoft courses: Word 97, Excel 97, Access
97, Outlook 97, Front Page 97, Front Page 2000, PowerPoint 97
and Projects 2000. Among the many other course offerings available
through eUniversity are Performance Management, Customer Service,
Communication, and Health and Safety Practices.
Administaff will be hosting a conference call
today at 11:00 a.m. EST to discuss the quarterly results, business
trends and factors relating to the change in health insurance carriers.
To listen in, call 1-800-997-8642. The call may also be accessed
via the Internet at www.administaff.com.
Administaff is a leading personnel management
company that serves as a full-service human resources department
for small and medium-sized businesses throughout the United States.
With 2000 revenues of $3.7 billion, Administaff ranks number 448
on the Fortune 500 list. In addition, Administaff is included on
Fortune's list of "America's Most Admired Companies," on the Forbes
Platinum 400 list of the best big companies in America and on the
InformationWeek 500 list of leading information technology innovators.
Administaff's Personnel Management System includes
employment administration, benefits management, government compliance,
recruiting and selection, employer liability management, training
and development, performance management and owner support. These
core services are complemented by an eBusiness strategy that includes
the Employee Service CenterSM, an interactive eService
platform that provides clients and worksite employees with information
and resources to help maximize the benefit of their Administaff
services. The Employee Service Center also features My MarketPlaceSM,
an eCommerce portal that offers value-added products and services
from best-of-class providers such as American Express, AT&T, Bank
One, Continental Airlines, Dell, IBM and Spiegel.
Administaff has 35 sales offices in 19 major
markets. For additional information, visit Administaff's Web site
at www.administaff.com.
Administaff, Inc.
Summary Financial Information
(in thousands, except per share amounts and statistical data)
(Unaudited)
| |
Three months ended
September 30,
|
Nine months ended
September 30,
|
| |
2001
|
2000
|
Change
|
2001
|
2000
|
Change
|
| Operating results: |
|
|
|
|
|
|
| Revenues |
$ 1,085,944
|
$ 962,039
|
12.9%
|
$ 3,174,139
|
$ 2,582,034
|
22.9%
|
| Direct costs: |
|
|
|
|
|
|
| Salaries and wages of worksite employees |
903,136
|
804,525
|
12.3%
|
2,645,237
|
2,156,446
|
22.7%
|
| Benefits and payroll taxes |
133,487
|
117,447
|
13.7%
|
410,213
|
333,474
|
23.0%
|
| Gross profit |
49,321
|
40,067
|
23.1%
|
118,689
|
92,114
|
28.9%
|
| Operating expenses: |
|
|
|
|
|
|
| Salaries, wages and payroll taxes |
17,035
|
13,905
|
22.5%
|
50,017
|
38,256
|
30.7%
|
| General and administrative expenses |
10,950
|
9,022
|
21.4%
|
33,866
|
25,612
|
32.2%
|
| Commissions |
2,534
|
2,331
|
8.7%
|
33,866
|
25,612
|
32.2%
|
| Advertising |
1,213
|
1,249
|
(2.9)%
|
4,520
|
3,681
|
22.8%
|
| Depreciation and amortization |
4,298
|
2,987
|
43.9%
|
12,138
|
8,503
|
42.7%
|
| |
36,030
|
29,494
|
22.2%
|
109,122
|
82,760
|
31.9%
|
| Operating income |
13,291
|
10,573
|
25.7%
|
9,567
|
9,354
|
2.3%
|
| Interest and other income |
1,013
|
1,104
|
(8.2)%
|
3,814
|
2,841
|
34.2%
|
| Income before income taxes |
14,304
|
11,677
|
22.5%
|
13,381
|
12,195
|
9.7%
|
| Income tax expense |
5,645
|
4,262
|
32.4%
|
5,285
|
4,451
|
18.7%
|
| Net income |
$ 8,659
|
$ 7,415
|
16.8%
|
$ 7,744
|
$ 8,096
|
4.5%
|
| Basic net income per share |
$ 0.32
|
$ 0.27
|
18.5%
|
$ 0.29
|
$ 0.29
|
—
|
| Diluted net income per share |
$ 0.30
|
$ 0.25
|
20.0%
|
$ 0.28
|
$ 0.27
|
3.7%
|
| Weighted average common shares outstanding: |
|
|
|
|
|
|
| Basic |
27,480
|
27,295
|
|
27,448
|
27,099
|
|
| Diluted |
28,932
|
29,780
|
|
28,701
|
28,712
|
|
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
| |
Three months ended
September 30,
|
Nine months ended
September 30,
|
| |
2001
|
2000
|
Change
|
2001
|
2000
|
Change
|
| Statistical data: |
|
|
|
|
|
|
| Average number of worksite employees paid
per month |
70,835
|
65,722
|
7.8%
|
68,724
|
60,184
|
14.2%
|
| Fee revenue per worksite employee per month |
$ 4,886
|
$ 4,655
|
5.0%
|
$ 4,852
|
$ 4,526
|
7.2%
|
| Fee payroll cost per worksite employee
per month |
4,033
|
3,865
|
4.3%
|
4,005
|
3,750
|
6.8%
|
| Gross markup per worksite employee per
month |
853
|
790
|
8.0%
|
847
|
776
|
9.1%
|
| Gross profit per worksite employee per
month |
232
|
203
|
14.3%
|
192
|
170
|
12.9%
|
| Operating expenses per work- site employee
per month |
170
|
150
|
13.3%
|
176
|
153
|
15.0%
|
| Operating income per work-site employee
per month |
63
|
54
|
16.7%
|
15
|
17
|
(11.8)%
|
| Net income per worksite employee per month |
41
|
38
|
7.9%
|
13
|
14
|
(7.1)%
|
| |
September 30,2001
(Unaudited)
|
December 31,2000
|
| Balance Sheet data: |
|
|
| Working capital |
$ 46,147
|
$ 51,179
|
| Total assets |
254,874
|
242,817
|
| Total debt |
4,000
|
—
|
| Total stockholders' equity |
111,318
|
105,510
|
(Note: The statements contained in this press
release that are not historical facts are forward-looking statements
that involve a number of risks and uncertainties. Therefore, the
actual results of future events described in such forward-looking
statements could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to
differ materially are: (i) changes in general economic conditions;
(ii) regulatory and tax developments; (iii) changes in Administaff's
direct costs and operating expenses; (iv) the estimated costs and
effectiveness of capital projects and investments in technology
and infrastructure; (v) Administaff's ability to effectively implement
its eBusiness strategy; (vi) the effectiveness of Administaff's
sales and marketing efforts, including the company's marketing arrangements
with other companies; and (vii) changes in the competitive environments
in the Professional Employer Organization industry. These factors
are described in further detail in Administaff's filings with the
Securities and Exchange Commission.)
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